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Here's Why ACADIA Pharmaceuticals Jumped 17.7% in November

Shares rallied hard in response to a number of positive announcements.

What happened

Shares of Acadia Pharmaceuticals(NASDAQ:ACAD), a commercial-stage biopharma focused on diseases of the central nervous system, rose by more than 17% in November, according to data from S&P Global Market Intelligence. That was a large enough gain to outperform the red-hot biotech sector in general, as measured by the SPDR S&P Biotech ETF(NYSEMKT:XBI)

So what

Acadia showered its shareholders with good news during the month. Here's a recap of the highlights:

Sales of Nuplazid, the company's only FDA-approved drug that is used to treat Parkinson's disease psychosis, came in at $5.3 million for the quarter. That was far ahead of the $2.6 million in total sales Wall Street was expecting.

The company made a lot of progress expanding formulary access to the Nuplazid drug during the quarter. Management stated that Nuplazid is now covered by nearly all Medicare plans, and that commercial payers are rapidly expanding access, too.

Net loss for the quarter came in at $71.6 million, or $0.61 per share. That was slightly higher than the $0.56 loss the pros were expecting.

Acadia ended September with more than $588 million in cash.

Here's how CEO Steve Davis summed up the quarter:

We are very pleased with the launch and are gratified by the positive feedback we have received from physicians, patients, and caregivers on Nuplazid. We saw solid month-over-month prescription growth, reported increased payor coverage, and continued to expand awareness of Nuplazid among movement disorder specialists, neurologists, and psychiatrists.

Beyond the quarterly results, Acadia also continued to build out its pipeline during the month:

The company announced that its new phase 3 trial ENHANCE-1 trial kicked off during the month. This study is testing Nuplazid as a potential adjunctive treatment in patients who have schizophrenia and are not adequately responding to their current antipsychotic therapy.

The company also initiated its phase 2 ADVANCE study in November. This trial is evaluating Nuplazid as a potential adjunctive treatment in patients with negative symptoms of schizophrenia.

Given the much better than expected sales results and expanding possibilities for Nuplazid, it's not hard to understand why shares rallied so much during November. That's especially true when you consider that shares of Acadia tumbled more than 27% in October.

Now what

Roughly 400,000 Americans suffer from Parkinson's disease psychosis, and currently, Nuplazid is the only FDA-approved treatment for the disease on the market. As providers and insurers grow more comfortable with the drug, it's highly likely sales will continue to scream higher.

The next catalyst investors can look forward to is a data readout from the company's phase 2 study using Nuplazid as a potential treatment of Alzheimer's disease psychosis. Top-line results are expected before the end of the year, which suggests Acadia's shares will likely have another volatile month ahead.

Overall, Acadia looks well positioned for strong growth in the years ahead, but the company remains a high-risk, high-reward proposition. I'd advise bulls and bears to both approach the stock with caution.

Brian Feroldi has no position in any stocks mentioned. Like this article? Follow him on Twitter where he goes by the handle @Longtermmindset or connect with him on LinkedIn to see more articles like this.

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Author

Brian Feroldi has been covering the healthcare and technology industries for the Motley Fool since 2015. Brian's investing goal is to find the highest quality companies that he can find, buy them, and then to sit back and let compounding work its magic. See all of his articles here and make sure you follow him on Twitter.
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